Hark the Herald Square Angel
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\"macys\"Is there any store more associated with the holiday that Christmas has become in America than Macy’s?

After all, how many retailing corporations are the stars of their own legendary motion picture that celebrates the spirit of Christmas? And how many host their own parade that practically signals the start of the holiday shopping season?

So, as Christmas 2013 starts to fade from our consciousness, it seems only appropriate to unwrap a modest ode to Macy’s, specifically for their holiday home merchandising strategy and more generally to the overall management of the store and its position at, or near, the top of the American retailing pyramid.

That we are even doing this is rather remarkable when you think about it. It wasn’t that long ago that many retail observers were pontificating on the end of the great American department store as we knew it. As a business model, the channel was bloated with overhead; geographically-poor locations in declining regional malls; and competitively disadvantaged compared to its big-box discount and superstore brethren.

Macy’s, as the largest business in the channel, was particularly challenged. The result of a massive amalgamation of more than a dozen individual regional retailers, it was in danger of becoming less – far less – than the sum of its parts.

There were not a lot of people optimistic about the future of Macy’s.

Very Terry

A decade later you can point to many factors that have turned the Macy’s story around. Certainly, the leadership of Terry Lundgren has to be at the top of the list…much to the consternation of those who thought he was no more than another empty suit. They have had to eat their words for sure.

The consolidation of all of those individual Federated and May Co. nameplates under the one Macy’s name – with Bloomingdale’s spared to run separately as a small well-off fiefdom – has proven to be exactly the right plan. That’s particularly true when it’s been balanced by the My Macy’s localized merchandising strategy, which has also caused several cases of indigestion for industry skeptics.

Let’s not forget that the centralized merchandising plan was first rolled out in the home division. Macy’s Home had more than its fair share of speed bumps – not to mention a dead end or two – but it allowed the company to work out the kinks so that when the entire operation went to national it ran pretty smoothly.

Home Sweet Spot Home

Which takes us to the home merchandising structure today and what shoppers saw at Macy’s this past Christmas. It does so many things right that it’s difficult to find any retailer doing a better job in the classification these days.

Among the Highlights:

  • While some stores (like Kohl’s) struggle to get their private-label vs. national- brands balance right, Macy’s seems to be nailing it perfectly.
  • Homegrown labels like Charter Club and INC serve as strong counterpoints to Ralph Lauren and Izod in soft home. Captured brands like Tommy Hilfiger only add to the mix.
  • The first lady of home at Macy’s remains Martha Stewart, and while it’s a marriage made in hell these days, it’s a strong program with great product development and merchandise selection.
  • Most department stores have not been able to remain competitive in hard goods categories like small appliances and cookware, but Macy’s has done a solid job staying a viable option for shoppers in classifications that are sometimes loss leaders.
  • Macy’s is even still in the furniture business. It has an outstanding mattress business – much larger and more profitable than most people suspect – but it also sells mainstream bedroom, living room and dining furniture, categories all but abandoned by virtually every one of its channel competitors.
  • And yes, Macy’s promotes endlessly, but it knows who its customers are. Like Bed Bath & Beyond with its ubiquitous coupons and Kohl’s with its crazy percentage-off deals, Macy’s knows its shoppers love their one-day sales…especially when they run two days.

But Wait…There’s More

It’s a compelling combination and it works. Then you add in the outstanding physical remodeling program at the Herald Square flagship: the main floor of the store is so well done that even best-in-class players like Uniqlo and Restoration Hardware have to take notice. Plus a television ad campaign that puts its well-known celebrities and their product brands – even Martha – front and center and it’s not hard to see why Macy’s is doing so well. The ongoing rollercoaster that Penney has been on, the continuing meltdown at Sears, and the failure of Kohl’s to capitalize on either have all helped Macy’s to be sure.

All of that business could have gone elsewhere, yet Macy’s got it. And miracles have had nothing to do with it.

Warren Shoulberg is editorial director of several Progressive Business Media home furnishings business publications and has seen Miracle on 34th Street several times.

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